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Test your basic knowledge |
AP Microeconomics
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Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A firm that has market power in the factor market (a wage-setter)
Average Variable Cost (AVC)
Average Product of Labor (APL)
Monopsonist
Luxury
2. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied
Law of Supply
Public goods
Collusive oligopoly
Shortage
3. A good for which higher income decreases demand
Economics
Non-collusive oligopoly
Inferior Goods
Perfectly elastic
4. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits
Marginal Productivity Theory
Cartel
Positive externality
Monopsonist
5. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Perfect competition
Relative Prices
Price floor
Variable inputs
6. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Positive externality
Incidence of Tax
Free-Rider Problem
Average Product of Labor (APL)
7. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Profit Maximizing Resource Employment
Long Run
Collusive oligopoly
Determinants of Demand
8. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Constant cost industry
Allocative Efficiency
Inferior Goods
Law of Supply
9. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Determinants of Labor Demand
Subsidy
Marginal Product of Labor (MPL)
Substitute Goods
10. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.
Economies of Scale
Normal Goods
Four-firm concentration ratio
Non-collusive oligopoly
11. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Increasing Cost Industry
Consumer surplus
Income Effect
Constant Returns to Scale
12. Ed = 0 - no response to price change
Perfectly inelastic
Marginal Revenue Product (MRP)
Total Revenue Test
Marginal Benefit (MB)
13. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Perfectly competitive long-run equilibrium
Unit elastic demand
Price inelastic demand
Least-Cost Rule
14. The total quantity - or total output of a good produced at each quantity of labor employed
Total Product of Labor (TPL)
Average Variable Cost (AVC)
Absolute Advantage
Productive Efficiency
15. Ed > 1 - meaning consumers are price sensitive
Long Run
Price elastic demand
Explicit costs
Necessity
16. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly
Private goods
Necessity
Substitution Effect
Four-firm concentration ratio
17. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment
Law of Increasing Costs
Price Ceiling
Spillover benefits
Excess Capacity
18. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms
Demand for Labor
Absolute prices
Absolute Advantage
Marginal Product of Labor (MPL)
19. The imbalance between limited productive resources and unlimited human wants
Determinants of Demand
Scarcity
Spillover costs
Four-firm concentration ratio
20. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic
Total Revenue Test
Income Effect
Shutdown Point
Decreasing Cost industry
21. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK
Economics
Allocative Efficiency
Perfectly competitive long-run equilibrium
Least-Cost Rule
22. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.
Scarcity
Profit Maximizing Resource Employment
Surplus
Luxury
23. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Economic Growth
Marginal Revenue Product (MRP)
Price elastic demand
Price Ceiling
24. AFC = TFC/Q
Substitution Effect
Determinants of Labor Demand
Absolute Advantage
Average Fixed Cost (AFC)
25. Ed = 8 - infinite change in demand to price change
Total Revenue Test
Perfectly elastic
Income Elasticity
Accounting Profit
26. A good for which higher income increases demand
Determinants of Labor Demand
Subsidy
Market Economy (Capitalism)
Normal Goods
27. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Constrained Utility Maximization
Normal Goods
Determinants of Supply
Unit elastic demand
28. Es = (%dQs) / (%dPrice)
Marginal Cost (MC)
Marginal Revenue Product (MRP)
Profit Maximizing Resource Employment
Price Elasticity of Supply
29. The most desirable alternative given up as the result of a decision
Long Run
Opportunity Cost
Private goods
Positive externality
30. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Short run
Implicit costs
Price elastic demand
Marginal Benefit (MB)
31. Models where firms agree to mutually improve their situation
Collusive oligopoly
Substitute Goods
Consumer surplus
Normal Goods
32. Ei > 1
Luxury
Comparative Advantage
Utility Maximizing Rule
Fixed inputs
33. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Constrained Utility Maximization
Cartel
Perfect competition
Variable inputs
34. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Total Welfare
Complementary Goods
Producer surplus
Subsidy
35. The ability to set the price above the perfectly competitive level
Price floor
Marginal Cost (MC)
Market power
Law of Diminishing Marginal Utility
36. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Shortage
Perfect competition
Utility Maximizing Rule
Income Effect
37. Exists at the point where the quantity supplied equals the quantity demanded
Public goods
Spillover costs
Market Equilibrium
Monopoly long-run equilibrium
38. Product demand - productivity - prices of other resources - and complementary resources
Shortage
Income Elasticity
Determinants of Labor Demand
Profit Maximizing Rule
39. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax
Price Ceiling
Excise Tax
Surplus
Average Fixed Cost (AFC)
40. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Marginal Cost (MC)
Cross-Price Elasticity of Demand
Shutdown Point
Marginal Analysis
41. TR = P * Qd
Marginal tax rate
Total Revenue
Derived Demand
Four-firm concentration ratio
42. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Market Equilibrium
Oligopoly
Increasing Cost Industry
Luxury
43. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Price Ceiling
Comparative Advantage
Determinants of Demand
Economic Growth
44. Costs that change with the level of output. If output is zero - so are TVCs.
Four-firm concentration ratio
Total variable costs (TVC)
Price elasticity
Subsidy
45. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Marginal Productivity Theory
Perfectly elastic
Comparative Advantage
Marginal Revenue Product (MRP)
46. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity
Unit elastic demand
Marginal Productivity Theory
Public goods
Constrained Utility Maximization
47. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Oligopoly
Relative Prices
Absolute Advantage
48. Ed = 1
Total Revenue Test
Law of Demand
Unit elastic demand
Comparative Advantage
49. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Law of Diminishing Marginal Utility
Accounting Profit
Fixed inputs
Relative Prices
50. 0 < Ei < 1
Average Product of Labor (APL)
Profit Maximizing Rule
Necessity
Dead Weight Loss